Ilargi: London Is Fracking, And I Live By The River

By Raúl Ilargi Meijer, editor-in-chief of The Automatic Earth, Cross posted from Automatic Earth

It’s a state of mind, a way of thinking and a belief system bordering on outright religion all in one. If it would be recognized as a religion, it would be the world’s biggest. Its followers and proponents hold that growth is a necessary element of survival, that technology is capable of solving all problems (especially those caused by mankind), and that the earth, nature, the living environment, is there for mankind to be exploited at will to achieve that growth. What puts it so close to being a religion is that it doesn’t like to question it own assumptions, let alone have them questioned by others, and anyone who does so anyway is ostracized.

One group of people that fits the description to a tee is the current British government. It would be hard to find anyone in the world outside of corporations involved who promote genetically modified food as fervently as Downing Street 10 and its crew. Likewise, there probably is no government that’s as convinced of the blessings of the shale and fracking industry as Prime Minister David Cameron and his lieutenants. Until recently, the Polish government might have given them a run for their money, but in Poland the entire industry essentially died in just the past few months.

Just last week, I wrote an article named Shale Is A Pipedream Sold To Greater Fools, a title which of course kind of gives away my position on the shale issue. Still, if you read it you can see that position isn’t primarily based on environmental issues; I simply looked at the numbers and started questioning the assumptions. Comments to the article said things like: “… the US has seen a huge rise in production of both oil and gas..!, but that wasn’t not my point: what I’m questioning is what’s extrapolated from today’s data, for tomorrow.

People assume all too easily that what is produced today will be also be produced well into the future, maybe because of how conventional oil and gas typically play out, but the 40% depletion rates for the average well at the Bakken play today, put together with the undoubtedly worsening future rates, for ever more, and inevitably ever more marginal, wells, don’t paint a rosy picture. It may all look fine today, but looking at the numbers I don’t see how it can still look good even a few years from now.

On to Britain. A few months ago, the Telegraph reported:

UK chancellor George Osborne pledges most generous tax regime for shale gas

Chancellor George Osborne has pledged to make Britain’s tax regime the “most generous for shale in the world” as the Treasury pressed ahead with promised tax breaks for fracking firms. “I want Britain to be a leader of the shale gas revolution – because it has the potential to create thousands of jobs and keep energy bills low for millions of people,” Mr Osborne said.

A new tax allowance will see a certain portion of income from each shale gas “pad” — or production site – receive an effective tax rate of 30%, rather than 62%. The tax break is similar to those on offer to oil and gas explorers in technically-challenging and less economic fields in the North Sea, where they have been credited with revitalising interest. [..]

That made the cabinet’s position plenty clear, but apparently protest groups like Frack Off! have been so successful in drawing attention to their take on matters that today PM Cameron himself got involved, with a letter to the people, also published in the Telegraph. Let’s take a look at it. But first, here’s the parts of Britain the government considers fit for drilling:

Right map: red areas are licensed for fracking, yellow ones are under consideration

And here’s Cameron this morning:

We cannot afford to miss out on shale gas

Fracking has become a national debate in Britain – and it’s one that I’m determined to win. If we don’t back this technology, we will miss a massive opportunity to help families with their bills and make our country more competitive. Without it, we could lose ground in the tough global race.

As with any advance in technology, fracking – drilling for so-called “unconventional” gas – has rightly drawn scrutiny. But a lot of myths have also sprung up. So today I want to set out why I support it – and deal with the worst of the myths at the same time.

Always nice to see that someone on one side of a debate says something like “a lot of myths have sprung up,” without feeling the need to specify which side of the debate these myths have come from. Me? I’m the Prime Minister, I don’t spread myths!!

First, fracking has real potential to drive energy bills down. Labour’s mismanagement of the economy means that many people are struggling with the cost of living today. Where we can act to relieve the pressure, we must.

Also great. It’s almost as if the other side’s failures in the past (Cameron’s been in power for over 3 years) make fracking today inevitable. Like the myths, classic political spin 101. (Don’t get me wrong, I have no more sympathy for Tony Blair or Gordon Brown then for Cameron, they’re all the same to me).

It’s simple – gas and electric bills can go down when our home-grown energy supply goes up. We’re not turning our back on low carbon energy, but these sources aren’t enough. We need a mix. Latest estimates suggest that there’s about 1,300 trillion cubic feet of shale gas lying underneath Britain at the moment – and that study only covers 11 counties. To put that in context, even if we extract just a tenth of that figure, that is still the equivalent of 51 years’ gas supply.

Now, now, now, the spin is starting to spin out of control here (and we’re only in the 3rd paragraph). Initial estimates for Poland, which came from the US Energy Information Administration (EIA), had to be slashed by over 90% within 2 years. So, “to put that in context”, the UK can count on less than 1% of the initial estimates.

This reservoir of untapped energy will help people across the country who work hard and want to get on: not just families but businesses, too, who are really struggling with the high costs of energy. Just look at the United States: they’ve got more than 10,000 fracking wells opening up each year and their gas prices are three-and-a-half times lower than here. Even if we only see a fraction of the impact shale gas has had in America, we can expect to see lower energy prices in this country.

Secondly, fracking will create jobs in Britain. In fact, one recent study predicted that 74,000 posts could be supported by a thriving shale-gas industry in this country. It’s not just those involved in the drilling. Just as with North Sea oil and gas, there would be a whole supply chain of new businesses, more investment and fresh expertise.

74,000 jobs. That’s the best Cameron’s spin doctor could do. What’s Britain’s working population? 40 million? Hmm.

Thirdly, fracking will bring money to local neighbourhoods. Companies have agreed to pay £100,000 to every community situated near an exploratory well where they’re looking to see if shale gas exists. If gas is then extracted, 1% of the revenue – perhaps as much as £10 million – will go straight back to residents who live nearby. This is money that could be used for a variety of purposes – from reductions in council-tax bills to investment in neighbourhood schools. It’s important that local people share in the wealth generated by fracking.

This must be my favorite line. You get to keep an entire 1% of what they take away from under your feet. No further comment, your honor.

The benefits are clear. But it’s also crucial to put to bed the myths. It has been suggested in recent weeks that we want fracking to be confined to certain parts of Britain. This is wrong. I want all parts of our nation to share in the benefits: north or south, Conservative or Labour. We are all in this together.

If neighbourhoods can see the benefits – and are reassured about its effects on the environment – then I don’t see why fracking shouldn’t receive real public support. Local people will not be cut out and ignored. We are issuing very firm guidance: firms looking to frack should make people aware of their plans well before they apply for a permit. Dialogue is important and if residents express specific concerns, then companies should take them on board. From my experience as a local MP, people tend not to oppose developments for the sake of it. But what they do object to is the idea that their neighbourhood should change without any say. We want people to get behind fracking, and a transparent planning process is an important ingredient.

Equally, we must make the case that fracking is safe. International evidence shows there is no reason why the process should cause contamination of water supplies or other environmental damage, if properly regulated. And the regulatory system in this country is one of the most stringent in the world. If any shale gas well were to pose a risk of pollution, then we have all the powers we need to close it down.

In fact, international evidence shows a whole of doubt when it comes to the safety of fracking. First off, oil and gas companies can inject any quantity of any chemical they see fit into fracking wells, and not even a judge can force them to reveal what they are. Proprietary. Business secrets. Second, there are far too many stories about water contamination to just be brushed off the table. That’s just irresponsible behavior, and certainly not fit for a government.

Third, there are also many reports of earthquakes, in which nobody has conclusively ruled out the effects of fracking and drilling. It may be hard to prove 100%, but that doesn’t mean there’s no danger. And with a government so obviously so eager to start fracking away, people may be forgiven for asking a question or two about its attention to safety standards.

It’s not as if Cameron calls for an open discussion, he makes very clear that he wants to start fracking, and he either thinks the discussion’s already happened or none is needed. All that stands in his way is what he labels a bundle of myths spread by a bunch of pesky protesters who want that open discussion with him. Unfortunately for him, it’s quite simply not true that “International evidence shows there is no reason why the process should cause contamination of water supplies or other environmental damage”. The evidence doesn’t conclusively show any such thing. There are serious doubts, and they should call for hesitancy, not hurry.

When all is said and done, though, one myth still remains – that fracking damages our countryside. I just don’t agree with this. Our countryside is one of the most precious things we have in Britain and I am proud to represent a rural constituency. I would never sanction something that might ruin our landscapes and scenery. Shale gas pads are relatively small – about the size of a cricket pitch. But more than that, similar types of drilling have been taking place for decades in this country without any real protest. The South Downs National Park remains one of the most beautiful parts of Britain, yet it has been home to conventional oil and gas drilling since the Eighties. The huge benefits of shale gas outweigh any very minor change to the landscape.

I like this one. See, Cameron claims no damage will be done to the British countryside, but really, he himself mentioned above that the US has “more than 10,000 fracking wells opening up each year“. Which could effectively dot the lovely English landscape with 10,000 times this each year:



Or this:



So my message to the country is clear – we cannot afford to miss out on fracking. For centuries, Britain has led the way in technological endeavour: an industrial revolution ahead of its time, many of the most vital scientific discoveries known to mankind, and a spirit of enterprise and innovation that has served us well down the decades. Fracking is part of this tradition, so let’s seize it.

Now, Cameron is right to be worried about Britain’s energy future. With the North Sea fields largely gone and little else on the horizon, the country finds itself at the very end of a very long pipeline coming from Russia. Norway may help a little, but still.

That, however, doesn’t mean a hasty plunge into an adventure that has very uncertain future outcomes, both in energy production and in environmental effects, is recommendable. One would hope the historical lessons of using, first, too much wood and, second, too much coal, would at least have lingered in the public mind to some degree.

If the assumptions I draw from the data are anywhere near the truth, fracking will not be much help for Britain. While the environmental costs can be biblical. It would be at best a huge gamble, and is gambling really the best option? Here’s another look at the average Bakken well:


There’s zero reason to assume Britsh wells will do any better than that. So it will be drilling more and more wells, faster and faster, until more drilling is no longer economically viable. At that point, anyone want to take a stab at what will happen to energy prices?

King Arthur’s descendants have some hard choices to make when it comes to their economy, their society and their country as a whole, and it’s not as if they’re the only ones. Plunging economic prospects and energy supplies will not be easy to deal with. But letting people like David Cameron and the techno-happy religion he represents take the upper hand will only make it worse.

Why not wait a few more years, see what happens to the fracking industry in Bakken, in North Dakota? Demand more reports on the risks of water contamination and earthquakes, tell the industry there’s no way they can inject massive amounts of chemicals into British soil not even a government’s allowed to know. What if what happened to shale in Poland happens in Britain too, and the whole industry crumbles?

Then again, looking at the succession of Thatcher through John Major, Tony Blair, Gordon Brown to David Cameron, it seems safe to say that Britain has a political crisis at least as damaging to its future as its upcoming energy crisis.

The ice age is coming, the sun’s zooming in

Meltdown expected, the wheat is growing thin

Engines stop running, but I have no fear

‘Cause London is drowning, and I live by the river

The Clash, London Calling

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  1. ScottS

    Really? I thought the US example would be a cautionary tale. Aside from the personal and environmental devastation, it doesn’t make economic sense — a big boom in shale gas production drops the price precipitously and make it unaffordable to sell shale gas. And it’s a world market, so how much of a dent can Britain really make? If the market is already glutted, why not buy from someone who has already ruined their environment?

    I have more questions than answers, I suppose.

    1. from Mexico

      Natural gas is not that fungible.

      In order to be transported (outside of a pipeline) it must be liquefied. Then when it reaches its destination it has to be deliquified.

      Without even raising the issue of operating expense, large captial investments with long lead times, and a litany of environmental and safety issues, are entailed on both ends.

  2. Michael G

    I don’t much like fracking, but what is going to happen when the UK has its next spat with Putin and he turns the gas off? Relying on imported energy leaves the constant risk of blackmail. Green energy would be nice, but self sufficiency is the priority.

    1. Yves Smith Post author

      You seem to miss that water and energy are not separate issues.

      All of this “oh but we need the energy” ignores the very high cost in potable water, which is the world’s scarcest resource (we start running out in 2050, before any other critical resource).

      Oh, but you say, we can create more potable water! Water is reusable!

      Right. And what does THAT require? Energy.

    2. from Mexico

      Michael G says:

      I don’t much like fracking, but what is going to happen when the UK has its next spat with Putin and he turns the gas off? Relying on imported energy leaves the constant risk of blackmail.

      Your question has a built-in assumption, and that is that shale gas will solve the UK’s energy problem. Ilargi’s claim, which I am in complete agreement with, is that it will not.

      Ilargi’s claim is based on the actual historical (as in past) performance of shale gas wells. Cameron’s is based on pie-in-the-sky future claims.

      Cameron’s claims are tantamount to saying we can breed and train human beings to run an average of 120 km/h, even though this has never been done before. (The Average walking speed is 3-4 MPH 5-6 KmPH or about 100 yards/meters per minute. Running speed sustained is about twice that 8 MPH, 12 KmPH or 200 yards/meters per minute. )

      And this is not an exaggeration. The actual historical performance of shale gas wells is about 10% of the reserves that were assigned to them when they were drilled.

      The Barnett Shale Field in Texas is the perfect example. When these wells were drilled back in the mid-naughties, reserves were touted at 5 BCF per well. In hindsight, the wells have cumulative production of slightly over .5 BCF per well, and at current producing rates will be lucky to see lifetime cumulatives of 1 BCF per well.

      All this data is at your fingertips on the internet in a report published by the Texas Railroad Commission:

      “Barnett Shale Information”

      1. from Mexico

        The demagoguery coming out of Cameron and Obama in regards to these shale plays is part and parcel of the creeping totalitarianism we witness in both the UK and the US. As Hannah Arendt explains in The Origins of Totalitariansim:

        Before mass leaders seize the power to fit reality to their lies, their propaganda is marked by its extreme contempt for facts as such, for in their opinion fact depends entirely on the power of man who can fabricate it.

        Oddly enough, it is science and scientists which are the totalitarian leader’s greatest ally in this flight into fantasy, as Arendt goes on to explain:

        The scientificality of totalitarian propaganda is characterized by its almost exclusive insistence on scientific profecy as distinguished from the more old-fashioned appeal to the past.


        Totalitarian propaganda raised ideological scientificality and its technique of making statements in the form of predictions to a height of efficiency of method and absurdity of content because, demagogically speaking, there is hardly a better way to avoid discussion than by releasing an argument from the control of the present and by saying that only the future can reveal its merits. However, totalitarian ideologies did not invent this procedure, and were not the only ones to use it. Scientificality of mass propaganda has indeed been so universally employed in modern politics that it has been interpreted as a more general sign of that obsession with science which has characterized the Western world since the rise of mathematics and physics in the sixteenth century; thus totalitarianism appears to be only the last stage in a process during which “science [has become] an idol that will magically cure the evils of existence and transform the nature of man” (Eric Voegelin, The Origins of Scientism).

        Why do the people buy into the lies, when they are so easily demonstrated to be false, defying all reality and all common sense? Daniel Yankelovich offers some insight into this phenomenon:

        In the Reagan years after the severe recession from 1981 to 1983, Americans went on a prolonged mental holiday. They were encouraged to do so by Mr. Reagan’s own wishful thinking, which seemed to bring good times to the country. Opinion polls showed that once one got beyond the first superficial questions, people realized it was not possible to lower taxes, vastly increase defense expenditures, and balance the budget all at the same time. But Ronald Reagan was president. He accepted the responsiblity. He said what people desperately wanted to hear after so many years of increased taxes, stagflation, divisiveness over the war in Vietnam, and social policies that deeply troubled average Americans.

        –DANIEL YANKELOVICH: Coming To Public Judgment: Making Democracy Work in a Complex World

        Arendt offers up another cause:

        The revolt of the masses against “realism,” commons sense, and all “the plausibilities of the world” (Burke) was the result of their atomization, of their loss of social status along with which they lost the whole sector of communal relationships in whose framework common sense makes sense. In their situation of spiritual and social homelessness, a measured insight…could no longer operate. Totalitarian propaganda can outrageously insult common sense only where common sense has lost its validity.

        Radical individualism, therefore, creates an isolated individual cut off from community, empirical reality and common sense, who succumbs to a

        mixture of gullibility and cynicism… In an ever-changing, incomprehensible world the masses had reached the point where they would, at the same time, believe everything and nothing, think everything was possible and that nothing was true… The totalitarian mass leaders based their propaganda on the correct psychological assumption that, under such conditions, one could make people believe the most fantastic statements one day, and trust that if the next day they were given irrefutable proof of their falsehood, they would take refuge in cynicism; instead of deserting the leaders who had lied to them, they would protest that they had known all along that the statement was a lie and would admire the leaders for thier superior tactical cleverness.

        We know from Cameron’s statements in the wake of the BlackBerry riots in the UK in 2011 that Cameron is every bit as much of a reactionary, right-wing evangelist of the security and surveillance state and radical individualism as Obama is. It is difficult to believe that the security and surveillance state and the ideology of radical individualism are connected at the hip with the demagoguery that issues from the mouths of these two aspiring totalitarians, but I believe they are.

  3. Clive

    I live not that far from one of the sites where fracking was approved (although so far oil has been drilled for but not a fracking well).

    The question has received massive publicity locally and protests were well supported, if ultimately unsuccessful.

    And at this point, I’ll risk incurring the wrath of all NC readers by saying that, here, I’m thinking that progressives / liberals / environmentalists (whatever tag you want to label us with) are in danger of being both counter productive and also hypocritical. In my neighbourhood, I’ve never felt such a sense of parochial NIMBY-ism (Not in my Back Yard) and a willingness to make energy supply — and usage — someone else’s problem.

    Would I, given a choice, actually ask for fracking in my locality ? No.

    But what, then, are the alternatives ?

    Let me list them:

    * Coal burning — we’re practically sitting on coal everywhere you look here. But thermal coal is probably the worst possible source of energy. So that’s out.
    * Imported natural gas — this sounds okay, but where are we importing in from ? Some of the nastiest regimes in the world, thereby propping them up. Or the US, in which case how dare we outsource our environmental management responsibilities just because it’s easier ? That is not ethically — or economically — the right thing to do. If we use the energy, we should, if we can, take the hit in terms of environmental impact and the responsibility to protect the environment right here. Otherwise, where is our incentive to change ? We cannot dump the collateral damage on the good citizens of the US.
    * Nuclear — my “least worst” option. But comes with it’s own environmental dangers.
    * Renewables — the best option but never going to be able on its own to sustain all national energy needs. It could do if we don’t have a resurgent big manufacturing industry, but then we are — again — just pushing our own environmental impact somewhere else. As soon as we end up with a big baseload to support heavy, energy intensive industry, we need more than renewables. And many local campaigners don’t want wind farms in their back yards either.
    * Energy saving measures — here is my biggest peeve. I know people in the community where fracking is proposed. There is fuel poverty in some households and there I have sympathy because those people are largely blameless. But many of the “anti frackers” live in large (too large for their immediate needs), delightful, period properties with appalling thermal insulation and energy guzzling lifestyle appliances. The AGA stove (or similar) is right at the top of my list of things I’d like to ban. But the irony of having one of those things sitting there day in day out quietly combusting vast quantities of the same precious resource, the production of which is being complained about, is lost on some people. And suggesting that the household takes steps to improve the thermal envelope of the building and even get energy efficient heat pumps installed, well, that’s too much cost / trouble / nuisance.

    There’s a philosophy that the polluter should pay. And so we should. It’s far too convenient to let other countries take the environmental hit for our energy usage. If you don’t like nuclear, you don’t want to look at a windfarm, you won’t reduce your energy consumption, you don’t like being dependent on overseas supply of energy sources, you won’t have fracking then what, please tell me, *do* you want ? Because it sounds to me like you simply want to make it someone else’s problem and to avoid having to change your own lifestyle or make different choices in what you spend your money on.

    Very little sympathy from me, then, for this lot. Sorry, but at the risk of making a sweeping generalisation, they’ve only go themselves to blame. It was alright for them when it was a long way away from them. Now the environment chickens have come home to roost. When they start living a less energy intensive existence, I’ll be more on their side.

    1. Yves Smith Post author

      With all due respect, you are talking to the wrong person.

      I live in an apartment (much less energy use than a free standing house).

      I’ve never owned a car and hope never to own a car. I prefer to walk and use public transportation. I take cabs maybe a couple of times a month on average.

      If I lived in a house, I would insulate it like crazy and get solar panels. Really good fans reduce the need for A/C (the difference between really good and average fans is pretty remarkable). Hot water bottles and heavy sweaters reduce how much you have to heat in the winter. My big carbon extravagance is I do fly on airplanes 4-6 times a year and when I vacation I wind up using a rental car.

      It is actually not hard not to use tons of energy if you locate yourself so you don’t have to use a car much (as in work at home or near your home and can run most daily errands on foot or on a bike and use a car just for really big shopping expeditions and occasional weekend jaunts).

      1. Clive

        Certainly not aimed at you Yves !!!

        City dwellers have, by and large, made compromises to live close-up with a pretty industrialised landscape, in usually small square foot per person spaces but don’t entail big resource inputs to get them to work, to friends, to leisure etc. The payoff is convenience, vibrancy.

        The rural dwelling folk I was referring to have made almost the opposite choices. Valuing the natural environment, living space and the absence of reminders of how harsh the modern urban landscape can be but forgetting (or choosing not to remember) the energy penalty inherent in supporting that choice. However you cut it, it’s less efficient and therefore more energy demanding to sustain communities which are diffuse. Especially if they make further choices which make the problem worse like insisting on having 1000+ sq foot per person residences. In some ways, if they now have to put up with encroaching industrialisation — fracking in this case — that to me is maybe not a bad thing.

        So no, I’m not having a go at city dwellers at all. Just the opposite actually.

        1. Yves Smith Post author

          There are less bad rural/semi-rural versions but you don’t see as much of them. People who are serious gardeners don’t have to spend as much time and energy driving to stores. You can insulate a rural house to be more energy efficient. And growing a lot more trees around your house will keep it cooler in the summer (but that takes a long time).

          The key to being energy efficient as a rural person is being very disciplined about driving, as in planning so as to minimize the number of trips. People who grew up commuting to work in a car find it really hard not to be casual about driving. My sense is that’s where the big reconditioning needs to take place, and it seldom occurs.

          1. DanB

            We have three generic choices regarding consuming less energy:

            1. Efficiency, as in install a 90%+ high efficiency natural gas furnace to replace the old 65% one
            2. Conserve, as in lower the thermostat from 70˚ to 65˚
            3. Decomplexify, as in get rid of the gas furnace

            Choice 1 is culturally acceptable; choice 2 is acceptable to some extent; choice 3 is considered an absurdity, but it’s the one nature is imposing upon us as we go into net available/affordable energy decline. We are entering the post-peak oil world but our modernist blinders make this very difficult to see and accept.

            1. Carla

              It’s my understanding that at least in Ohio, where I live, the infrastructure is so ancient and unsound that up to 40% of the natural gas being delivered to homes leaks out into the ground…a tremendous waste and a pollution hazard. Is this true elsewhere? A similar problem exists with our water infrastructure.

              While some noise is being made about rebuilding the water infrastructure (and rates are being jacked up accordingly), I hear very little about natural gas leakages.

          2. anon y'mouse

            energy use, energy use. city vs. country.

            i’m no expert in anything, but it would seem to me that while it is true that density and car-free living saves one a ton of energy on an ongoing basis, I think that exploring the issue more would lessen the difference between city and country vis a vis energy usage.

            you have to consider the built space as embodied energy also. city apartments require more energy as they are built for longer lifespans (hopefully), and to greater engineering standards. food and all else must be brought in from afar, so just because one is not driving to suburban shopping malls does not mean that the energy is not being used. more intensely engineered infrastructure is also required. probably, city living may still come out ahead depending upon where you live simply due to combined mass in heating space (for northern zones where heating is the primary concern) and the fact that the built space is designed for a longer life span (potentially multiple generations can use without having to rebuild entirely).

            rural—yes, too much driving if one must make a daily commute, and also poorer built spaces that require much more retrofitting to be truly energy efficient, but as Yves points out, you can do a lot with landscaping. passive solar orientation, berming, thermal mass foundations, rock walls or other walls or shrubs to block prevailing winds in winter, proper awning length or built pergolas to provide shading of entryways in summer, properly insulated windows AND appropriate window coverings for different seasons. all of this stuff really depends upon where you live and which demand is greatest (heating vs. cooling).

            let’s not blame each other. just figure out a way for each to use as little energy as humanly possible.

            1. anon y'mouse

              and this doesn’t even tip the iceberg when one considers the embodied energy of every single thing in one’s home.

              why are we shipping basic necessities like clothing, furniture, etc. halfway round the world much less food? even a roll of toilet tissue in your home probably costs more energy (and water) to manufacture than one is probably willing to believe. much of this is hidden from us (internalize the externalities problems).

    2. vlade


      I sort of don’t understand. You say on one hand “what else but fracking” but on the other “polluter should pay”? I agree with the latter (and most people would agree at least in principle, although in practice changing their mind once shown the real energy bills), but should not that be the first step, and only then consider whether fracking is still economically viable? Because, ultimately, fracking should pay for the polution it causes too – and it’s far from established how much it polutes. The initial indications aren’t good either. If, as a fracking company, my stuff was very very clean and ecologically friendly, I’d, at the very least, get someone independent bound by strong NDAs to assert so (heck, that’s what NDAs are for). Now that would be a significant business advantage in the current environment! (think “paraben free” cosmetics and stuff – it takes a while for the competition to get there while you take the market share). The fact that none of them are willing to do that strongly suggests that the fracking compound is a nasty, or at least can be construed as unsafe. Given that you don’t know what is in it, you can’t quantify the environmental costs, and thus “polluter pays” becames unfeasible.

      Ergo, I’d be much much more willing to consider fracking, if the industry was more transparent and the real costs were clearer.

      I.e. – a) wait a year or two (on the large scale of things it doesn’t matter. Oops, it’s an election there, so maybe it does to Cameron); b) get the fracking companies to put all revenues (ex direct costs) into a trust fund, with the returns released only gradually (i.e. prescribed return on capital, ala regulated utility model), and any environmental costs paid from the trust as a first-claim; c) license (on a confidential basis, or maybe even with some patent-like protection) their fracking compounds; No license, no fracking. Breach of license – banned from fracking industry for life (all people in the company bar any whistleblowers), with the financial penalty being all assets of the company (yes, is disporportionate. But long-term detterents need to be short-term disproportionate to be effective). If the fracking industry can agree to that – and, if they are really clean, they should be willing to go that way – then they can frack as far as I’m concerned.

      As an aside, what I find fascinating is that Cameron is perfectly happy to roll over NIMBYism to get fracking off to a start, yet not to do the same in terms of housing (where the problem is supply of land). Surely, even Downs can be made look ok with properly thought out villages (i.e. not super-dense xerox-houses developments with no greenery around), unlike with a forest of oil/gas pumps? And surely, solving the housing problem (which keeps getting the country into unmanageable debt) is at least as important as the energy – especially if the new planning would actually have some reasonable energy guides. We can take a page from some of the continental countries here, it’s not so hard, and the fact that it was good for Victorians doesn’t mean it’d be good enough for us (while admitting that some of the Victorian housing I lived in was more energy efficient than UK houses build in 2005. Go figure.).

    3. from Mexico

      @ Clive

      You make the same mistake which Michael G does in his 3:02 a.m. comment above.

      What is stunning to me is the ease with which folks like you and Michael G buy into the fantastical pipe dreams being peddled by fascist demagogues like Cameron and Obama.

      1. Ben Johannson

        We want to believe there’s a solution to every peoblem that involves little to no personal sacrifice. Belief in the power of technology and Capitalism! to improve life in all ways is bred into Americans from the pre-natal ward on. It’s not that people are dumb, just that this sort of thinking is a reflex.

        1. from Mexico

          Yep. I think every waking day I move closer to a socialist posture. Sure, it’s not perfect. But what political-economic philosophy is? There is really no escape from the antinomy between freedom and nature that Kant articulated, regardless of what the “will to truth” crowd would have us believe.

          Reinhold Niebuhr, writing in The Irony of American History, foresaw the looming problem many decades ago:

          If either moral pride or the spirit of rationalism tries to draw every element in an historic situation into rational coherence, and persuades us to establish a direct congruity between our good fortune and our virtue or skill, we will inevitably claim more for our contribution to our prosperity than the facts warrant. This has remained a source of moral confusion in American life. For, from the later Puritans to the present day we have variously attributed American prosperity to our superior diligence, our greater skill or (more recently) to our more fervent devotion to the ideals of freedom. We thereby have complicated our spiritual problem for the days of adversity which we are bound to experience. We have forgotten to what degree the wealth of our natural resources and the fortuitous circumstances that we conquered a continent just when the advancement of technics made it possible to organize that continent into a single political and economic unit, lay at the foundation of our prosperity.

          1. jonboinAR

            Neibur’s point is, I think, kinda like what I tell people in my neighborhood. It really seems to get their goat. They’re basically right wing extremists, everything the fault of government, unions are evil, Yankee, commie plots to ruin good folks character. I point to that famous depression photo of the destitute family at the door of their shack. I ask them what they think the difference is between them and that family, how they got the infinitely more comfortable lifestyle they enjoy now. They say, kind of challengingly, “It was through our own hard work!”

            I answer, “So! You think you work harder than these folks, your ancestors worked? Remember, they lived just about like this all the way back through history. You think you got where you did by working harder than them? You’ve worked HARDER than these people did who couldn’t work their way out of these rags and this shack?” They’re getting kind of hacked off now, judging by their expressions.

            “Well, what do YOU think the difference was (Mr. Smarty Pants)?”

            “The difference, my friend, is the labor movement, and what you call “socialism”, things like social security, like what that socialized medicine you so vehemently oppose would be like.” They don’t say anything, now, but they look pretty steamed. Their too polite to hit me. After that they pretty much tend to shun me, as they would any other commie, so I don’t really do it anymore.

            Moral: People really don’t like to be told that they didn’t get where they are strictly through their own hard work. It really ticks them off if you kind of prove it to them using simple logic.

            1. Ben Johannson

              I think you’ve nailed why the right always has the advantage: Americans want to believe bullshit. Half the people who came to this country did so to get rich rather than for free religious expression and hustlers always justify their ill-gotten gains by insisting on personal superiority, the favor of god and other such foolishness.

      2. Clive

        NO ! Sorry, I am absolutely 100% NOT advocating self sufficiency. Where the energy comes from is completely irrelevant.

        My point is that we need to reduce energy consumption. Some of the very same people complaining about fracking are not doing anything whatsoever to reduce their energy consumption (and it is a choice, they do have the money to do so) and will fight tooth and nail to have the right to live a lifestyle which is heavily dependent on abundant, cheap energy. What they want to do is maintain the same sort of behaviour and continue to fob the consequences of it on to the rest of the world, just like they’ve always done.

        Now that the consequences are starting to come a little closer to home (literally) it’s a terrible disaster.

        I knew I’d start a fracas with my original comment ! Talk about courting controversy… but it’s important I think to realise that, in this case, we can’t shift responsibility onto crappy governments, useless regulators, rapacious big energy or whoever. The problem is with us and we have to start doing things differently. (“us” in this context is the population of the UK, but it’s probably just as relevant for people everywhere). I hope readers “get” what I’m trying to say here.

        1. from Mexico

          @ Clive

          What was the time lapse between your first comment and this one? Four hours? And yet you believe we should completely forget what you said in your earlier comment? Let me remind you:

          I live not that far from one of the sites where fracking was approved (although so far oil has been drilled for but not a fracking well).

          The question has received massive publicity locally and protests were well supported, if ultimately unsuccessful.


          Would I, given a choice, actually ask for fracking in my locality ? No.

          But what, then, are the alternatives ?

          So tell me, with a straight face, that you did not posit shale gas and the massive hydraulic fracturing it entails as a viable alternative?

          1. Clive

            I never used the word “viable” so please don’t put words in my mouth.

            Is fracking theoretically possible ? Yes
            Is fracking environmentally safe ? Unproven and I’d say No
            Is fracking going to happen absent regulatory intervention ? Yes
            Is fracking economically viable ? Yes
            Is fracking shunned by the majority of the population ? Yes
            Is fracking rendered unnecessary/irrelevant by the majority of the population reducing their energy consumption ? No
            Is fracking made more likely to be introduced because the majority of the population refuse to change their behaviour ? Yes

            So “viability” depends on what question you’re asking of whom.

            Don’t get me wrong, I’m not in favour of fracking at all. But I’m a long way from being convinced that people are motivated to make the required changes in energy consumption to make it irrelevant. Nor am I convinced that people will vote in lawmakers who will legislate against it because, similarly, they don’t want to get outside their comfort zones.

            And I’m even less enamoured with the notion that it’s all so hard, it’s only individuals and how much can they do in the face of structural constraints imposed by the political/economic systems we live under yada yada yada. Get some backbone people, and start taking the steps you can take to render fracking the bizarre, obsolete, curiosity it deserves to be.

            1. curlydan

              “Is fracking shunned by the majority of the population ? Yes”

              Where do you get this? Please provide a source.

              Fracking is generally welcomed by the population at first. We are pounded with arguments such as: 1. It’s “clean, natural gas” they say, 2. Get $10K just for letting us come in, 3. It reduces our need for foreign oil…but let’s face it, it’s mainly the money that people like.

              It’s never conservation that’s peddled…just consumption with better technology.

            2. from Mexico

              Clive says:

              Is fracking economically viable ? Yes

              Your claim is balanced awkwardly between tautology and falsehood.

              You can repeat your claim 10 times, 1,000 times or 1,000,000 times, but that will not make it true. The only thing that will make it true is if somewhere in the future shale wells all of a sudden start producing many times the amount of gas they have in the past.

              Like I said above, the averge cumulative production of a Barnett Shale well is only a little bit north of .5 BCF. Most of these wells were drilled between 2001 and 2011, so have been producing for anywhere between 2 and 12 years. The Barnett was the first, is the oldest and likely will remain the biggest shale gas play in the United States.

              How much is .5 BCF worth to the producer? If we estimate a 20% royalty, 6% wellhead severence tax, and $1.60 per MCF operating, ad valorem and other expenses, with today’s NYMEX Henry Hub gas price of $3.35 per MCF, that means .5 BCF is worth a whopping $440,000 net to the producer. If we estimate total reserves at 1 BCF, a very optimistic outlook indeed, then at today’s gas price we may hope to have our average Barnett shale well produce natural gas worth a total net to the producer of $880,000.

              Now here’s the rub. Those wells cost about $5 million each to drill. If you call investing $5 million to get back $880,000 “economically viable,” then man do I have some wonderful investments for you.

              So let’s play with gas prices a bit. If we assume a future natural gas price of $10 per MCF, with all the other inputs being the same, now our 1 BCF of reserves is worth $5.8 million. So at $10 per MCF, drilling the average Barnett Shale well is only slightly better than a break-even proposition. And that is not the discounted present value of that income stream, but total future income.

              So what happens an $18 per MCF gas price, which was the highest price that LNG has ever reached?


              With $18 per MCF and all the other inputs being the same, now our 1 BCF of reserves is worth $11.7 million. So at $18 per MCF, drilling the average Barnett Shale well is a very marginal venture, economically speaking.

              So the bottom line is this: To make these wells “economically viable,” one must assume some very high gas prices, or that these wells will somehow in the future produce one hell of a lot more gas than they have in the past, or both.

              1. from Mexico

                @ Clive

                Let me throw some more data at you.

                When the Barnett Shale play was really hot back in 2005 to 2008, the corporations drilling these wells were throwing around reserve figues like 5 BCF per well.

                Now they are more modest, with “many industry estimates of at least 2 billion cubic feet (bcf) of gas and as much as 3 bcf per well.”

                However, “the U.S. Geological Survey last year put a 1 bcf estimate on Barnett wells.”

                But here’s the crux of the matter, that maybe even a layman that is not a petroleum engineer can get their head around:

                But what about producers’ estimates of 2 bcf or even 3 bcf?

                Only 512 wells in the Barnett Shale, or less than 3 percent, have produced 2 bcf or more in their lives, according to the Railroad Commission/ Powell Shale Digest data. A mere 70 wells [out of more than 16,000 wells drilled through June, 2011], less than 1 percent, have hit 3 bcf or more.

                Read more here:

              2. Nathanael

                From Mexico: I’ve studied this fairly carefully.

                Most fracking operations are, indeed, not economically viable. They are land-flipping scams.

                Some of the fracking operations in the Bakken shale are economically viable, because *they aren’t looking for gas*. If the oil companies can get enough “liquids” (oil) out of the shale, the economics may become profitable.

        2. myshkin

          ” I’m thinking that progressives / liberals / environmentalists (whatever tag you want to label us with) are in danger of being both counter productive and also hypocritical… What they want to do is maintain the same sort of behaviour and continue to fob the consequences of it on to the rest of the world, just like they’ve always done.”

          Undersantable frustration but generalising about the collective is a venture fraught with mistatement and probably not helpful. Whoever they is, in this context, it seems, you mean the societal collective.

          There is not one answer to the dilemna of energy as your bullet point of possible solutions suggests. The solution, if it exists is a mix of tactics including some you mention but cannot be reduced to one.

          To date the TPTB, the socio-political-economic system which the collective finds itself engaged with and guided, not so gently by, has haphazzardly designed that system without acknowledging critical problems or forthrightly addressing the criticisms that a significant percentage of the collective has raised. Ultimately it has incorporated and encouraged as meritorious much of the worst in the way of individual and corporate behavior through all channels of power and communication and sometimes crushed violently or otherwise the opposition. A highly effective approach.

          We know why that is but should we not concede that it has skewed the collective’s trajectory on energy and the myriad peripheral but critical factors accompanying energy choices including where we live, how we transport ourselves, etc?

          For those looking for alternatives the entire system is stacked heavily against them. The path of least resistance is in fact a broad super highway with many entrances, those who have broken through the consumerist propaganda focused on us with ever greater precision and magnitude must seek their own way. There is little encouragement and much to discourage, emanating from the apparatus of the corporate state.

          It is not surprising that the collective has lost their way, the central enterprise is largely constructed to mislead.

    4. Lambert Strether

      On NIMBYs: My experience with landfills and the East-West highway here in the great state of Maine is that the NIMBYs are the ones most likely to get the policy right, since bearing the brunt of the impact incentivizes them to develop winning cases against these projects in public forums.

      It’s a shame that the cost of citizenship is borne only by them — and not by the project beneficiaries — but that’s the system we’re stuck with for now.

    5. Nathanael

      Renewables can sustain all national energy needs.

      That’s where you’ve simply been lied to.

      Please, please, go look up the estimates of solar capacity. Solar can supply the world, easily.

      This is just one of DOZENS of links regarding this:

      I realize Britain has one of the worst climates for solar in the world, but solar can still supply Britain. You will probably have to insulate your buildings too.

      Solar is also cheap and getting cheaper.

  4. Nicholas Shaxson

    “”Companies have agreed to pay £100,000 to every community situated near an exploratory well where they’re looking to see if shale gas exists. If gas is then extracted, 1% of the revenue – perhaps as much as £10 million – will go straight back to residents who live nearby.”

    Yes, indeed re your comment on the 1% figure. But that’s not the end of the story. That is a recipe for conflict without end. Which is the nearest ‘community?’ Who lives closer? Which ‘community’ has the greater need? Are the parts of that ‘community’ closer to the well to get more than those who live on the other side of the ‘community?’ Who in the ‘community’ gets to decide who gets what, and when – and why? How do we ensure that the friends of the deciders don’t get the contracts to build stuff? Will the frackers have any say in whether one nearby ‘community’ gets more than another?
    I have spent quite a bit of time in the Niger Delta and although the UK is obviously a very different place, the generic pressures will take the similar, divisive forms. Great idea.

    1. fajensen

      “Divisive” is exactly the purpose: Camoron and the cronies who pay his rent *want* people to fight each other rather than having them gang up and getting a better deal or stop the fracking.

      1. anon y'mouse

        because of the same mentality that doesn’t allow rising productivity to be shared with the workers.

        we’re just raw materials to be exploited.

  5. AbyNormal

    The amazing satellite image which shows how one tiny town (pop. 14,716) has fracked enough oil and gas to light up ‘Saudi America’
    (i imagine GB’ll be seen from another galaxy)

    UK will allow shale gas fracking despite earthquake connections?

  6. Raul Ilargi Meijer

    Clive et al,

    My issue in this article, and the one prior to it, is not about a choice of energy sources.

    What I seek to point out with the numbers is that shale is not so much an energy source as it is a shell game, a land speculation bubble, a get rich quick scheme. The Bakken depletion rates are so high that it’s very hard to see the industry survive on a viable basis beyond 2016 or so in the US. Shell last week wrote down $2.1 billion in shale assets outright, instead of trying to sit on them for a few years or at least sell them at a loss; that’s how bad the “assets” are.

    This is not to say the US doesn’t produce anything today, but to cast serious doubts on what it can produce tomorrow. I see no reason to think Britain will be any different. Poland is the big red flag: in just a few months’ time, it went from Europe’s biggest potential shale country to a big bad fail, before it even started.

    1. Clive

      Hi Raul, thanks for checking out our comments.

      Your totally right of course; no-one in their right minds would seriously welcome fracking as any sort of real resolution to the underlying issue.

      We are basically rearranging the deckchairs on the Titanic in any sort of discussion about changing the energy supply mix. What is needed is reducing consumption.

      My point was, there are two methods (in the main) to reduce consumption:

      1) “Stick One” — the pricing mechanism. If it’s more expensive then people should buy less of that particular commodity. The big problem which (this being NC) everyone probably knows is, this ridiculously simplistic “market solution” isn’t a solution at all. Poorer members of society just have to pay up for this basic essential of life. It’s regressive because it hits the poorest the hardest. The rich, broadly speaking simply complain but carry on regardless. And higher prices encourage *more* supply in the medium and long term which simply exacerbates the problem of over-dependence on energy.

      2) “Stick Two” — regulation demanding better building codes for insulation, energy efficient space heating and cooling, forced redistribution of energy suppliers profits to retrofitting buildings, tax breaks for renewables and other similar measures. But the voters won’t usually see the long term gain, only the short term pain. So the turkeys won’t vote for Christmas, as they see it. This approach might work better if people genuinely believed that this was shared sacrifice, but the whole question has been tainted with commercial enterprises vying for the next bail out or subsidy. It’s not entirely wrong, subsidies for renewables and low carbon energy can in some ways become just another skimming machine for big business.

      There’s no obvious “carrots” which can be utilised. As with other situations where the people who benefit in the current arrangement have to inflict a degree of loss on themselves to bring about inevitable change, it is simply wishful thinking to believe that will happen.

      Rightly or wrongly (probably wrongly I’ll admit), if it takes a fracking well at the bottom of your garden to spell it out that we in the “developed” world are out-and-out energy hogs and need to mend our ways then that’s what has got to happen. I sincerely hope it isn’t so, but thus far, I can’t see a mass movement of people making better choices.

      We often rightly blame our political processes, our corrupt institutions or exploitative corporations for our woes. Too right. They are responsible for all of those things. But we (you, I, our neighbours, our communities) must shoulder our share of the blame as well on this issue.

      1. Larry Barber

        The problems with “stick one” can largely be ameliorated by simply returning the money raised by a carbon tax to the people through a yearly or monthly check. Even distributing the proceeds “flatly”, that is, everybody gets a check of the same size, would actually help the poorer members of society since they use less energy, on average, than the rich. The rich are also more cost conscious than you give them credit for, that’s how they got, and stay, rich.

      2. charles sereno

        “Rightly or wrongly (probably wrongly I’ll admit), if it takes a fracking well at the bottom of your garden to spell it out that we in the “developed” world are out-and-out energy hogs and need to mend our ways then that’s what has got to happen. I sincerely hope it isn’t so, but thus far, I can’t see a mass movement of people making better choices.” (Clive)
        What your statement indicates to me is that you take a sane view of the dim prospects for “better choices” at the present time while also not giving up hope, and are even willing to join in efforts to change things. It’s also obvious that you have an open mind and are eager to correct/improve your ideas. I found your comments useful although I, too, would have a criticism. However, I definitely don’t think you should be “taken to the woodshed” for an honest opinion.

  7. John Jones

    Anyone know if Thorium will ever be a power source?
    Have heard some intresting stuff about it even a possible car
    powered by it. But don’t know if any of it is true or possible.

    1. Yves Smith Post author

      I’m no expert, but I believe the short answers are:

      1. Maybe but it’s 30-40 years away and

      2. It won’t do much for the internal combustion engine problem

  8. allcoppedout

    I wonder when we might get a mature attitude towards science? Hardly anyone is up to speed and the idea that a grasp of a few basics keys you into understanding is nonsense. Arendt was right that the science view is put over in the ‘she who must be obeyed’ voice of “objectivity”, but this has only been the continuation of establishment lying. Literature following Rachel Carson’s ‘Silent Spring’ (1962) is probably a better source of what goes on than Mexico’s material. The critical theorists rely too much on a straw man of science that contains the preposterous notion it is value-free. See

    My own guess on fracking and oil-shale is that if we have got this far into reserves we really need to be conserving them for manufacturing plastics and similar products, not burning them as energy. This is before we think of global warming and other environmental issues.

    The sheeple want easy, certain answers – whereas most scientists regard such as ‘blow jobs from god’. Most of us would not use economics, let alone politics as we have them as the basis for decision-making, though we are not above unrealistic claims to get our research projects funded (how long has fusion been round the corner – it’s still advertised to the sheeple as ‘sun power on Earth’, but in fact is not). One laughable claim was that fission would make energy as cheap as water – ironic given what Yves says on water!

    I live on top of the Bowland Basin fracking field and that alone is estimated to contain 24 – 60 years to total UK needs – but how much can be got out is another matter. I’m less concerned with fracking than our abject attitudes towards energy generally. The answer is to stop competing on energy and subsidising its cost. We should be going straight to ‘green’ through a simulated competition model.

    Our politics and economics have immense problems with proportionality – finance is the classic example funnelling money from the poor to the rich – but this is true in many other ways. Much we cannot afford is unaffordable only because of cheaper, dirtier alternatives.

    The scientific answer probably entails bringing a great deal more renewable energy on tap and making fertilizer, food and fossil fuels from “air” (and other resources) and that energy. Our puny economics can barely countenance such.

  9. Brooklin Bridge

    The big problem with all this stuff is that every unit of energy (political as well as physical) used in the process to extract energy from conventional carbon laden resources reduces by the same unit the amount of energy that will be used to develop renewable energy sources on a mass scale.

    We seem to be hell bound to use every last bit of human ingenuity to make the transition to depleted energy resources as existentially threatening an event as possible and to using that same ingenuity to come up with the most scurrilous means imaginable to abort and kill in the embryo any alternative vision from ever seeing the light of day.

  10. allcoppedout

    For anyone actually interested in fracking, google scholar produces a lot of free material on the simple search “fracking”.
    produces an interesting PDF with this abstract:
    The purpose of this piece is to apply some of the lessons learned during the period of industrialization in 19th century Europe to the study of the effects and appropriate regulation of the contemporary process of hydraulic fracturing, or fracking, in the natural gas industry. An attempt is made to support the conclusion that the harmful side effects associated with the creation of self-regulating markets for land, labor and money during the 19th century is paralleled today by the self-regulating character of the process of hydraulic fracturing. As a result, the negative consequences associated with industrialization are been visited again on present day market economies.

    The real problem is we have economics and factional politics instead of sensible planet and human development. In all this we have forgotten we are chattering chimpanzees with more interest in toys than examined living.

  11. F. Beard

    Its followers and proponents hold that growth is a necessary element of survival, that technology is capable of solving all problems (especially those caused by mankind), and that the earth, nature, the living environment, is there for mankind to be exploited at will to achieve that growth. Raúl Ilargi Meijer

    It’s our usury-based money system that requires growth simply to pay the interest. And there’s a “tragedy of the commons situation” too: those who don’t exploit the government-backed credit system to loot their neighbors risk becoming pure victims of it themselves.

    I used to wonder that Dante put bankers in such a low level in Hell but really, considering the damage they do, I’d be terrified to have been one on Judgement Day where my accusers might include those made homeless by them.

    But I’d also hate to have been someone who supported the current money system whether he was a banker or not.

  12. allcoppedout

    We don’t even need to consider fracking in regard to water supply – there are existing problems:

    I’d say economics is the tragedy of the Commons without understanding this is a problem rather than a model to follow. The planet’s population has trebled in my lifetime, which tells us how dumb we are individually, collectively, led or laissez-faire. Most of us still have soppy attitudes towards kids and what just letting things happen is causing. One of the few apparent successes of economics is that it made us realise how expensive kids are and make us limit out reproduction – but even this leaves us with aging workforces. What sort of haplees junk are we following?

  13. AbyNormal

    Unfair Share: How Oil and Gas Drillers Avoid Paying Royalties
    “The duty of the corporation is to make money for shareholders,” Anderson said. “Every penny that a corporation can save on royalties is a penny of profit for shareholders, so why shouldn’t they try to save every penny that they can on payments to royalty owners?”

    “Once the gas is produced, a host of opaque transactions influence how sales are accounted for and proceeds are allocated to everyone entitled to a slice. The chain of custody and division of shares is so complex that even the country’s best forensic accountants struggle to make sense of energy companies’ books.”

    “Because so many disputes come down to interpretations of contract language, companies often look to courts for clarification. Not many royalty cases have been argued in Pennsylvania so far, but in 2010, a landmark decision, Kilmer v. Elexco Land Services, set out that the state’s minimum royalty guarantee applied to revenues before expenses were calculated, and that, when allowed by leases, energy companies were free to charge back deductions against those royalties.”

    “When audits turn up discrepancies, attorneys say, many Pennsylvania leases require landowners to submit to arbitration – another exhaustive process that can cost tens of thousands of dollars. Arbitration clauses can also make it more difficult for landowners to join class action suits in which individuals can pool their resources and gain enough leverage to take on the industry.”

    “They basically are daring you to sue them,” said Aaron Hovan, an attorney in Tunkhannock, Pa., representing landowners who have royalty concerns. “And you need to have a really good case to go through all of that, and then you could definitely lose.”

    Win Win…right

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